Global equities fall as oil sinks; dollar rallies

NEW YORK, Feb 26 (Reuters) - Global equities dipped on
Thursday as investor enthusiasm was dampened by a pullback in
oil prices related to rising inventories, while the dollar rose
as economic data drove expectations that the Federal Reserve
will raise interest rates.

The U.S. S&P 500 ended down, led by an 1.8 percent
drop in energy shares. Brent crude settled down
2.6 percent and U.S. crude fell 5.5 percent.

The Nasdaq was a bright spot in U.S. equities,
rising on news of a technology deal as it drew closer to its
lifetime peak, hit in 2000.

U.S. consumer prices fell in the 12 months through January,
the first such decline since 2009 as gasoline prices continued
to tumble, but core prices, which exclude volatile items such as
food and gasoline, rose more than expected.

The MSCI All-Country World equity index was
down 0.2 percent after having hit a record high of 434.40 points
earlier in the trading day.

The dollar rose to a one-month high against a basket of
currencies, as the data on core inflation and data showing a
rise in U.S. durable goods orders supported bets that the
Federal Reserve will raise interests rates.

The president of the San Francisco Fed, John Williams, in an
interview on Fox Business Network on Thursday, said that the Fed
will probably start raising interest rates "sometime this
summer, or this fall" as inflation bottoms out and begins to
recover.

The comments followed congressional testimony by Fed Chair
Janet Yellen, this week, that the U.S. central bank would
consider rate hikes on a "meeting-by-meeting" basis.

After those comments, Thursday's data was a key driver in
currency and bond markets.

"It undermined the view that there's domestic disinflation.
It's more an international story about falling prices in goods
and commodities," said Alan Ruskin, global head of currency
strategy at Deutsche Bank in New York.

U.S. Treasuries prices fell after the consumer price data
pointed to marginally less dovish Fed policy and an auction of
seven-year notes saw soft demand.

The Dow Jones industrial average fell 10.15 points,
or 0.06 percent, to 18,214.42, the S&P 500 lost 3.12
points, or 0.15 percent, to 2,110.74, and the Nasdaq Composite
added 20.75 points, or 0.42 percent, to 4,987.89.

Earlier in the day European bond yields sank to fresh lows
as investors positioned for an extended era of cheap money ahead
of the European Central Bank's bond-buying scheme.

The pan-European FTSEurofirst 300 closed up 1
percent. Greek equities fell 2 percent, after Greece said
on Wednesday that it would struggle to make debt repayments to
the International Monetary Fund and the European Central Bank
this year.

The Russian rouble strengthened against the dollar
for a third straight day but sharply pared gains as oil prices
fell. The euro fell 1.5 pct against the dollar.

Gold prices rose 0.35 percent, rallying for a second day on
expectations of a Fed interest rate hike.
(Reporting by Sinead Carew; Additional reporting by Richard
Leong; Editing by Leslie Adler)